Question

Based on your chosen costing article ( Job costing), how useful was the cost information to the internal users in the organisation? Discuss with examples from your costing article

Answer 1

Job Costing and its usefulness to the internal users

· Job costing helps in determining accurate cost for each job. For example: Prime cost, Conversion cost, manufacturing cost, etc. This information is useful to internal users for various decision making For example: comparison of conversion cost across jobs,

· Job costing helps in determining and fixing the selling price. For example: Cost plus pricing, manufacturing cost mark up pricing etc.

· Job costing helps in achieving profitablity targets. For example: profits are fixed as % of cost which helps in tracking profitablity at each job level.

· Job costing helps in evaluation of which jobs are profitable and unprofitable. For example : It helps in taking decision regarding whether to continue or discontinue the jobs

· Job costing helps in specific situations like bidding, giving quotations, etc For example: based on job costing competitive quotes can be given which increases chances of getting the bid.